How well can you know your customers based purely on factors like age, gender, and marital status? Many recent reports discuss the limitations of focusing exclusively on traditional demographics.
As the world becomes smaller (and society becomes more diverse), generational, ethnic, and even geographical demographics increasingly have limitations. At the same time, psychographics and "usage" profiling have greater applicability—partly because technology now allows us to analyze individual consumer activities and likely future behaviors.One recent article in American Banker, titled "Beyond Demographics: Tracking Buying Trends," puts it into perspective, including a few noteworthy nuggets:
- Disappearing are customer segments like Boomers and Gen Xers; entering the scene are groups such as New Mediacs or Rennaissancers;
- Demographic segments still work, but aren't as efficient or as effective as behavioral measures;
- Only a small fraction of consumers do just one thing at a time anymore—many are simultaneously watching TV, reading a magazine, surfing the Internet, and listening to music; and
- Demographics are far away from discerning why a person makes a purchase; by analyzing behavior, you come closer to the answer.
In other words, marketing strategy and product design are more successful when they take into account consumers' actions and likely future actions—no matter what their demographic profiles. As described by Fred Senn, a founding partner in Fallon Worldwide, in the American Banker article:
"Any way you can look at how your customer behaves or thinks will give you an advantage."
